A few days ago we touched on the financial mistakes to avoid in your 20's, and now we want to talk about what to avoid in your 30's. In your 20's its moderately acceptable to not "have it together." There is less judgment from society when you're in your 20's, but by the time 30 hits, you're expected to get yourself together.
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1. Not paying into a retirement plan
Hopefully you started a 401K plan with your first job, and have been contributing to it regularly. If you have not started a retirement plan, you need to get on that, like yesterday! Since you're expected to be more financially stable in your 30's you should be growing your retirement as much as you can, and possibly looking into various investment options. A retirement fund is only one type of investment, so research all of your options.
2. Not having an emergency fund
The general rule of thumb is that every household should have 6-12 months worth of living expenses saved. The emergency fund should be separate from your regular savings so you're not tempted to use it on that vacation to Tahiti. Having an emergency fund will give you peace of mind in case of a job loss, illness, accident or any other unforeseen emergency. You never know what life will throw at you, so be prepared.
3. Ignoring credit card debt
If you ignored the general warning in your 20's to avoid racking up credit card debt, then your 30's should be dedicated to paying it off as quickly as possible. Most credit cards come with higher interest rates than most loans, so paying off your credit cards should be the first order of business. Make sure you don't miss a payment either because that could significantly damage your credit score- making it harder to get a home or car loan. If you have credit card debt with a high interest rate, consider using a balance transfer card to pay off that debt with 0% for up to 21 months.
4. Spending beyond your means
It's not uncommon to look around and see your friends buying new homes or taking expensive vacations, but don't be tempted to keep up with the Joneses. A very common mistake first time home buyers make is purchasing a home for the family they anticipate to have even before their first child is born. Our advice is to start with a home that meets your needs at the moment and then scale up as finances allow. You should really focus on mastering the art of budgeting in your 30's.
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